Final Results

 

TIDMFDT 
 
RNS Number : 9836I 
1st Dental Laboratories PLC 
23 March 2010 
 

                          1st Dental Laboratories plc 
                ("1st Dental" or the "Company" or "the Group") 
 
            Preliminary Results for the year ended 30 November 2009 
 
1st Dental Laboratories plc (AIM: FDT) the UK's largest and leading provider of 
dental laboratory products to the dental profession, announces its preliminary 
results for the year ended 30 November 2009 
 
                              Chairman's Statement 
 
Results Announcement 
I am pleased to provide my first Chairman's Statement to you since my 
appointment in September last year. Revenues showed a satisfactory increase 
compared with the previous year. The operational performance was patchy, with a 
higher gross profit offset by higher operating costs, especially exceptionals of 
GBP534k, which largely reflects the costs of restructuring and redundancy costs, 
resulting in an EBITDA loss of GBP359k compared with a GBP203k profit in 2008. 
 
Background 
I would like to welcome new shareholders who have decided to invest over the 
last year. 1st Dental Laboratories plc is a healthcare company focused on the 
dental sector, and is the largest operator of dental laboratories in the UK. The 
Board is currently focused on a turnaround strategy. 
 
The Group supplies from fourteen laboratories around the UK, with a total 
headcount of 237 at the year end. The Group estimates that it has approximately 
a 5% market share of the dental laboratory market. 
 
By way of background, I joined the Company in 2002 as Non-Executive Director 
when the Group first listed on the AIM Market.  At that time the Group owned 
three laboratories and the GBP2m funds raised at the time of the flotation were 
invested on acquiring several new laboratories.  The "Buy and Build" strategy 
was successful in the early years but the acquisition of Benchmark in the 2005 
financial year, which doubled the size of the Group, turned out to be very 
challenging. The combination of Benchmark, government imposed changes on the 
dental sector and the loss of key management in certain laboratories resulted in 
two years of declining sales and lack of profitability. 
 
Results for 2009 Summary 
With this background, the results for 2009 appear to show no improvement.  It 
has indeed been a year of change for the Group.  In April we appointed a new 
Finance Director, Jonathan Foxcroft, taking the place of Roger Smallwood. In 
September, Andrew Garner, who had been Executive Chairman and Founder, resigned 
from the Board.  At the same time Mark Ganderton, who had been with the Group 
since the acquisition of Benchmark, also resigned from the Board. 
 
I was asked to take on the role of Non-Executive Chairman.  At the same time the 
Board appointed Nigel Spring, who joined the Group in March 2008, as CEO. 
 
The exceptional costs of GBP534k reflect these management changes and other 
re-structuring costs specific to the year.  In addition the Company has provided 
GBP3.25m in impairment costs which reflect the impairment of goodwill relating 
to certain laboratories mainly originating from the acquisition of Benchmark. 
The level of the impairment provision can be considered to be based on a prudent 
approach by the Board to the trading prospects for these laboratories. 
 
During the year the Group created a new sales team which resulted in an increase 
in costs but also helped to arrest the recent decline in sales.  Indeed revenue 
growth for the year was 5% compared with the previous year, the first revenue 
increase since the financial year ended November 2006, and satisfactory given 
the difficult economic climate. 
 
During the year the Group generated GBP446k cash from operating activities 
compared to GBP311k last year. 
 
The Group expanded eTeeth, its online offer to dentists, during the year with a 
revenue increase of 69%. 
 
The issue of the GBP420k VAT liability reported last year remains unresolved and 
is being disputed with HMRC. This amount was booked in the Profit and Loss 
Account in the years ended 30th November 2007 and 2006. 
 
The Company had bank debts at year end of GBP1,247k which involves annual 
repayments of GBP510k and the Bank remains supportive of the Group. 
 
Results for 2009 Highlights 
 
·      Revenues  GBP10,572k  (2008: GBP10,065k), an increase of 5.0% 
·      Gross Profit  GBP3,817k   (2008: GBP3,656k), an increase of 4.4% 
·      Gross Profit % on Revenues  36.1%  (2008: 36.3%) 
·      Operating Loss before amortisation, goodwill impairment and non-recurring 
administrative expenses  GBP140k  (2008:  Profit GBP95k) 
·      Impairment provision primarily  on Benchmark laboratories  GBP3,250k 
(2008: GBPNil) 
·      Exceptional costs  GBP534k  (2008: GBP172k) 
·      Total operating loss  GBP3,935k  (2008: GBP87k) 
·      Pre tax loss of  GBP4,054k  (2008: GBP265k) 
·      Loss per Ordinary Share  9.65p  (2008: 0.59p) 
·      Net cash generated from operating activities of  GBP446k (2008: GBP311k) 
·      Bank debt reduction of GBP514k reducing from GBP1,761k to GBP1,247k 
 
Results in First Quarter to 28th February 2010 
Since the year end the first three months of trading up to 28th February have 
been satisfactory.  Revenues have increased 2% versus the same period last year. 
 This is despite revenues being severely hit in January because of the bad 
weather, which resulted in cancelled patient appointments with dentists and 
consequently a reduction in the level of work at the Group's laboratories. 
 
On 18th January 2010 Bradley Moore resigned as Technical Director.  Bradley had 
been a Director since flotation.  We have decided to re-structure his function 
with the appointment of two technical managers through internal promotion and 
with responsibilities on a regional basis. This should result in an improved 
level of technical support to the laboratories and over time should result in a 
higher level of concentration on quality and best practice through employee 
development. Further, this should result in an overall reduction in cost. 
 
Operational Review 
I would like to thank Roger Smallwood, Andrew Garner, Mark Ganderton and Bradley 
Moore for their contributions to the development of the Group. 
 
After a tough few years and despite the significant losses reported for the year 
to 30th November 2009, we did in fact increase revenues for the year and this 
trend has continued in the new financial year. The first three months of the new 
financial year showed a modest increase in revenue, a reduction in operating 
expenses and consequently an improvement in the Group's profitability. The new, 
much smaller Board of three people, together with the management team, have 
reviewed the Group's strategy, prepared a challenging business plan for the new 
financial year and are very focused on: 
 
-       protecting the Group from any further revenue decline 
-       improving the level of gross profit at laboratory level in the Group 
-       looking for continued cost reduction 
-       achieving an improvement in overall Group profitability 
 
The Board believes that it should continue to invest in two critical areas. 
These are: 
 
-       the new sales team, which is helping to build sales, provide improved 
customer service and improve communication to both existing dentist customers 
and to potential new customers of the range of services that the Group can 
provide, which is the best in the dental laboratory industry. 
-       its team of dental technicians throughout the country. The Board has 
taken steps to leverage the position of the Group as the biggest player in the 
sector, and develop a higher level of integration between the head office and 
the laboratories, and between the laboratories. This includes a stronger focus 
on quality and training and also improving communication of 1st Dental's focus 
on quality through its Damas quality registration. This should result in 
ensuring that head office is seen as more of a support operation to the field 
operations and help to ensure that best practice is applied. 
 
Further, through improved integration, the negative impact that the Group has 
suffered from in the past when key managers in laboratories leave the Group, 
should be minimised. 
We have in the first quarter re-branded the field operations, so that all 
laboratories are now operating under the 1st Dental brand. The human resources 
function has been strengthened. This role is taking the lead in improving 
employee communication, with regular newsletters, all aimed at building morale 
and developing a stronger brand image both within the organisation and in the 
market place. 
 
We have significantly upgraded our website www.1stdental.co.uk to support the 
stronger brand. This should strengthen customer loyalty, support the recruitment 
of new technicians, sales personnel and other staff when required, improve 
communication with suppliers and also help to improve communications with our 
investors. 
 
The Board is continuing to look at all of its activities including its pricing 
strategy, its organisation structure and its operating costs. 
 
The Board will continue to look at building revenues through selected marketing 
campaigns and public relations, introduction of new products for dentists or 
through building revenues via acquisitions, but only where the financial risk is 
minimal and consistent with the strategy of the Group. 
 
Outlook 
The economic outlook remains uncertain and the short term political situation is 
also unknown.  While healthcare spending is generally on the increase, the 
dental laboratory market remains challenging with many laboratories operating as 
tiny operations able to sell on price alone in what can best be described as 
largely a cottage industry.  As a Group, we are taking steps to leverage our 
position as market leader, but this will take time. However, the Board is of the 
view that the promising trends from the operating performance in 2009 have a 
chance of continuing into the rest of the current trading year, but the level of 
improvement remains fragile. The Board will maintain an iron focus on the costs 
of operations throughout the Group, and this will be achieved through quality 
analysis, comprehensive and timely reporting, resulting in pro-active management 
when required. 
 
You as shareholders will decide if the Group offers an attractive investment 
opportunity.  But the Board and the senior management team are working very hard 
to rebuild shareholder value.  Personally I am committed to providing regular 
updates to shareholders on the Group's performance and to provide a more 
frequent level of news announcements. Further, all the senior executives are on 
an incentive plan based on the annual budget with clear targets to achieve 
revenue and profits.  We are making some progress and continue to see external 
opportunities to build revenues but also to increase efficiencies, but many 
challenges remain. Our priority is to manage a turnaround which can be 
sustainable and is not just a quick fix. 
 
As Chairman, I would like to thank Nigel Spring for his contribution to the 
improving performance of the Group, especially since his appointment as CEO in 
September, to Jonathan Foxcroft as FD and to all the managers and staff around 
the Group. We are driving a turnaround strategy. We are managing cultural change 
throughout the Group's trading operations. I believe that the vast majority of 
our employees are supporting this. The Group's key objective is to re-build 
shareholder trust. 
 
I look forward to further updating you later in the year on the results for the 
first six months to 31st May. 
 
GT Sewell 
Non-Executive Chairman 
 
23 March 2010 
 
 
For Further Information: 
 
Grahame Sewell, Chairman                                             07767 350 
372 
William Vandyk, Astaire Securities Plc                            020 7448 4400 
Copies of the Report and Accounts will be sent to shareholders in due course and 
a further announcement will be made at that time. 
 
Consolidated Income Statement for the year ended 30 November 2009 
+-----------------------------------+----+---------------+---------------+ 
|                                   |    |          2009 |          2008 | 
+-----------------------------------+----+---------------+---------------+ 
|                                   |    |        GBP000 |        GBP000 | 
+-----------------------------------+----+---------------+---------------+ 
|                                   |    |               |               | 
+-----------------------------------+----+---------------+---------------+ 
| Revenue                           |    |        10,572 |        10,065 | 
+-----------------------------------+----+---------------+---------------+ 
| Cost of sales                     |    |       (6,755) |       (6,409) | 
+-----------------------------------+----+---------------+---------------+ 
|                                   |    | ------------- | ------------- | 
+-----------------------------------+----+---------------+---------------+ 
| Gross profit                      |    |         3,817 |         3,656 | 
+-----------------------------------+----+---------------+---------------+ 
| Administrative expenses           |    |       (7,752) |       (3,743) | 
+-----------------------------------+----+---------------+---------------+ 
|                                   |    | ------------- | ------------- | 
+-----------------------------------+----+---------------+---------------+ 
| Operating (loss)/profit before    |    |         (140) |            95 | 
| amortisation, goodwill impairment |    |               |               | 
| and non-recurring administrative  |    |               |               | 
| expenses                          |    |               |               | 
+-----------------------------------+----+---------------+---------------+ 
| Amortisation                      |    |          (11) |          (10) | 
+-----------------------------------+----+---------------+---------------+ 
| Goodwill impairment               |    |       (3,250) |             - | 
+-----------------------------------+----+---------------+---------------+ 
| Non-recurring administrative      |    |         (534) |         (172) | 
| expenses                          |    |               |               | 
+-----------------------------------+----+---------------+---------------+ 
|                                   |    | ------------- | ------------- | 
+-----------------------------------+----+---------------+---------------+ 
| Total operating loss              |    |       (3,935) |          (87) | 
+-----------------------------------+----+---------------+---------------+ 
|                                   |    |               |               | 
+-----------------------------------+----+---------------+---------------+ 
| Finance income                    |    |             2 |            37 | 
+-----------------------------------+----+---------------+---------------+ 
| Finance expenses                  |    |         (121) |         (215) | 
+-----------------------------------+----+---------------+---------------+ 
|                                   |    | ------------- | ------------- | 
+-----------------------------------+----+---------------+---------------+ 
| Loss before taxation              |    |       (4,054) |         (265) | 
+-----------------------------------+----+---------------+---------------+ 
| Taxation                          |    |             - |            16 | 
+-----------------------------------+----+---------------+---------------+ 
|                                   |    | ------------- | ------------- | 
+-----------------------------------+----+---------------+---------------+ 
| Loss for the year                 |    |       (4,054) |         (249) | 
+-----------------------------------+----+---------------+---------------+ 
|                                   |    | ------------- | ------------- | 
+-----------------------------------+----+---------------+---------------+ 
| Loss per ordinary share :         |    |               |               | 
+-----------------------------------+----+---------------+---------------+ 
| -  Basic                          |    |       (9.65p) |       (0.59p) | 
+-----------------------------------+----+---------------+---------------+ 
| -  Diluted                        |    |       (9.65p) |       (0.59p) | 
+-----------------------------------+----+---------------+---------------+ 
|                                   |    | ------------- | ------------- | 
+-----------------------------------+----+---------------+---------------+ 
 
All of the results of the Group are derived from continuing operations. 
 
Consolidated Statement of Changes in Equity as at 30 November 2009 
+---------------------------+------+---------------+---------------+---------------+---------------+ 
|                           |      |         Share |         Share |      Retained |         Total | 
|                           |      |               |       premium |      earnings |               | 
|                           |      |       capital |               |               |               | 
+---------------------------+------+---------------+---------------+---------------+---------------+ 
|                           |      |        GBP000 |        GBP000 |        GBP000 |        GBP000 | 
+---------------------------+------+---------------+---------------+---------------+---------------+ 
|                           |      |               |               |               |               | 
+---------------------------+------+---------------+---------------+---------------+---------------+ 
| At 1 December 2007 (as    |      |         4,202 |         6,358 |       (2,330) |         8,230 | 
| restated)                 |      |               |               |               |               | 
+---------------------------+------+---------------+---------------+---------------+---------------+ 
| Result for the year       |      |             - |             - |         (249) |         (249) | 
+---------------------------+------+---------------+---------------+---------------+---------------+ 
| Share based payment       |      |             - |             - |            16 |            16 | 
| charges                   |      |               |               |               |               | 
+---------------------------+------+---------------+---------------+---------------+---------------+ 
|                           |      | ------------- | ------------- | ------------- | ------------- | 
+---------------------------+------+---------------+---------------+---------------+---------------+ 
| At 30 November 2008       |      |         4,202 |         6,358 |       (2,563) |         7,997 | 
+---------------------------+------+---------------+---------------+---------------+---------------+ 
| Result for the year       |      |             - |             - |       (4,054) |       (4,054) | 
+---------------------------+------+---------------+---------------+---------------+---------------+ 
| Share based payment       |      |             - |             - |            23 |            23 | 
| charges                   |      |               |               |               |               | 
+---------------------------+------+---------------+---------------+---------------+---------------+ 
|                           |      | ------------- | ------------- | ------------- | ------------- | 
+---------------------------+------+---------------+---------------+---------------+---------------+ 
| At 30 November 2009       |      |         4,202 |         6,358 |       (6,594) |         3,966 | 
+---------------------------+------+---------------+---------------+---------------+---------------+ 
|                           |      | ------------- | ------------- | ------------- | ------------- | 
+---------------------------+------+---------------+---------------+---------------+---------------+ 
 
There is no material tax impact of share based payment charges recognised 
directly in equity. 
 
Consolidated Balance Sheet as at 30 November 2009 
+----------------------------------+----+---------------+---------------+ 
|                                  |    |               |               | 
|                                  |    |               |      Restated | 
|                                  |    |          2009 |               | 
|                                  |    |               |          2008 | 
+----------------------------------+----+---------------+---------------+ 
|                                  |    |        GBP000 |        GBP000 | 
+----------------------------------+----+---------------+---------------+ 
|                                  |    |               |               | 
+----------------------------------+----+---------------+---------------+ 
| Non-current assets               |    |               |               | 
+----------------------------------+----+---------------+---------------+ 
| Property, plant & equipment      |    |         1,950 |         2,069 | 
+----------------------------------+----+---------------+---------------+ 
| Intangible assets                |    |         3,806 |         7,067 | 
+----------------------------------+----+---------------+---------------+ 
|                                  |    | ------------- | ------------- | 
|                                  |    |               |               | 
+----------------------------------+----+---------------+---------------+ 
|                                  |    |         5,756 |         9,136 | 
+----------------------------------+----+---------------+---------------+ 
|                                  |    | ------------- | ------------- | 
|                                  |    |               |               | 
+----------------------------------+----+---------------+---------------+ 
| Current assets                   |    |               |               | 
+----------------------------------+----+---------------+---------------+ 
| Inventories                      |    |           321 |           295 | 
+----------------------------------+----+---------------+---------------+ 
| Trade and other receivables      |    |         1,582 |         1,596 | 
+----------------------------------+----+---------------+---------------+ 
| Cash and cash equivalents        |    |           413 |           563 | 
+----------------------------------+----+---------------+---------------+ 
|                                  |    | ------------- | ------------- | 
|                                  |    |               |               | 
+----------------------------------+----+---------------+---------------+ 
|                                  |    |         2,316 |         2,454 | 
+----------------------------------+----+---------------+---------------+ 
|                                  |    | ------------- | ------------- | 
|                                  |    |               |               | 
+----------------------------------+----+---------------+---------------+ 
| Total assets                     |    |         8,072 |        11,590 | 
+----------------------------------+----+---------------+---------------+ 
|                                  |    | ------------- | ------------- | 
|                                  |    |               |               | 
+----------------------------------+----+---------------+---------------+ 
| Current liabilities              |    |               |               | 
+----------------------------------+----+---------------+---------------+ 
| Interest bearing loans and       |    |           701 |           553 | 
| borrowings                       |    |               |               | 
+----------------------------------+----+---------------+---------------+ 
| Trade and other payables         |    |         1,725 |         1,137 | 
+----------------------------------+----+---------------+---------------+ 
| Current taxes                    |    |             - |             - | 
+----------------------------------+----+---------------+---------------+ 
|                                  |    | ------------- | ------------- | 
|                                  |    |               |               | 
+----------------------------------+----+---------------+---------------+ 
|                                  |    |         2,426 |         1,690 | 
+----------------------------------+----+---------------+---------------+ 
|                                  |    | ------------- | ------------- | 
|                                  |    |               |               | 
+----------------------------------+----+---------------+---------------+ 
| Non-current liabilities          |    |               |               | 
+----------------------------------+----+---------------+---------------+ 
| Interest bearing loans and       |    |           897 |         1,438 | 
| borrowings                       |    |               |               | 
+----------------------------------+----+---------------+---------------+ 
| Trade and other payables         |    |           294 |             - | 
+----------------------------------+----+---------------+---------------+ 
| Provisions                       |    |           489 |           465 | 
+----------------------------------+----+---------------+---------------+ 
|                                  |    | ------------- | ------------- | 
|                                  |    |               |               | 
+----------------------------------+----+---------------+---------------+ 
|                                  |    |         1,680 |         1,903 | 
+----------------------------------+----+---------------+---------------+ 
|                                  |    | ------------- | ------------- | 
|                                  |    |               |               | 
+----------------------------------+----+---------------+---------------+ 
| Total liabilities                |    |         4,106 |         3,593 | 
+----------------------------------+----+---------------+---------------+ 
|                                  |    | ------------- | ------------- | 
|                                  |    |               |               | 
+----------------------------------+----+---------------+---------------+ 
| Net assets                       |    |         3,966 |         7,997 | 
+----------------------------------+----+---------------+---------------+ 
|                                  |    | ------------- | ------------- | 
|                                  |    |               |               | 
+----------------------------------+----+---------------+---------------+ 
| Equity attributable to equity    |    |               |               | 
| holders of the Group             |    |               |               | 
+----------------------------------+----+---------------+---------------+ 
| Called up share capital          |    |         4,202 |         4,202 | 
+----------------------------------+----+---------------+---------------+ 
| Share premium account            |    |         6,358 |         6,358 | 
+----------------------------------+----+---------------+---------------+ 
| Retained earnings                |    |       (6,594) |       (2,563) | 
+----------------------------------+----+---------------+---------------+ 
|                                  |    | ------------- | ------------- | 
|                                  |    |               |               | 
+----------------------------------+----+---------------+---------------+ 
| Total equity                     |    |         3,966 |         7,997 | 
+----------------------------------+----+---------------+---------------+ 
|                                  |    | ------------- | ------------- | 
+----------------------------------+----+---------------+---------------+ 
 
Consolidated Cash Flow Statement for the year ended 30 November 2009 
+---------------------------------------+----------+---------------+---------------+ 
|                                       |          |               |               | 
|                                       |          |               |      Restated | 
|                                       |          |            30 |            30 | 
|                                       |          |      November |      November | 
|                                       |          |          2009 |          2008 | 
+---------------------------------------+----------+---------------+---------------+ 
|                                       |          |        GBP000 |        GBP000 | 
+---------------------------------------+----------+---------------+---------------+ 
|                                       |          |               |               | 
+---------------------------------------+----------+---------------+---------------+ 
| Operating activities                  |          |               |               | 
+---------------------------------------+----------+---------------+---------------+ 
| Loss for the year                     |          |       (4,054) |         (249) | 
+---------------------------------------+----------+---------------+---------------+ 
| Amortisation                          |          |            11 |            10 | 
+---------------------------------------+----------+---------------+---------------+ 
| Impairment of goodwill                |          |         3,250 |             - | 
+---------------------------------------+----------+---------------+---------------+ 
| Depreciation                          |          |           315 |           280 | 
+---------------------------------------+----------+---------------+---------------+ 
| Loss on sale of plant and equipment   |          |             7 |            32 | 
+---------------------------------------+----------+---------------+---------------+ 
| Share based payment charges           |          |            23 |            16 | 
+---------------------------------------+----------+---------------+---------------+ 
| Net finance expense                   |          |           119 |           178 | 
+---------------------------------------+----------+---------------+---------------+ 
| Income tax credit                     |          |             - |          (16) | 
+---------------------------------------+----------+---------------+---------------+ 
|                                       |          | ------------- | ------------- | 
+---------------------------------------+----------+---------------+---------------+ 
| Operating cash (outflow)/inflow       |          |         (329) |           251 | 
| before changes in working capital     |          |               |               | 
+---------------------------------------+----------+---------------+---------------+ 
| Movement in inventories               |          |          (26) |             1 | 
+---------------------------------------+----------+---------------+---------------+ 
| Movement in trade and other           |          |            14 |          (43) | 
| receivables                           |          |               |               | 
+---------------------------------------+----------+---------------+---------------+ 
| Movement in trade and other payables  |          |           858 |           212 | 
+---------------------------------------+----------+---------------+---------------+ 
| Movement in provisions                |          |            24 |            30 | 
+---------------------------------------+----------+---------------+---------------+ 
|                                       |          | ------------- | ------------- | 
+---------------------------------------+----------+---------------+---------------+ 
| Operating cash inflow from operations |          |           541 |           451 | 
+---------------------------------------+----------+---------------+---------------+ 
| Interest received                     |          |             2 |            37 | 
+---------------------------------------+----------+---------------+---------------+ 
| Interest paid on borrowings           |          |          (73) |         (168) | 
+---------------------------------------+----------+---------------+---------------+ 
| Interest element of hire purchase     |          |          (24) |           (9) | 
| payments                              |          |               |               | 
+---------------------------------------+----------+---------------+---------------+ 
| Income tax received                   |          |             - |             - | 
+---------------------------------------+----------+---------------+---------------+ 
|                                       |          | ------------- | ------------- | 
+---------------------------------------+----------+---------------+---------------+ 
| Net cash inflow from operating        |          |           446 |           311 | 
| activities                            |          |               |               | 
+---------------------------------------+----------+---------------+---------------+ 
|                                       |          | ------------- | ------------- | 
+---------------------------------------+----------+---------------+---------------+ 
| Investing activities                  |          |               |               | 
+---------------------------------------+----------+---------------+---------------+ 
| Purchase of plant and equipment       |          |          (77) |         (302) | 
+---------------------------------------+----------+---------------+---------------+ 
| Sale of plant and equipment           |          |            16 |            12 | 
+---------------------------------------+----------+---------------+---------------+ 
|                                       |          | ------------- | ------------- | 
+---------------------------------------+----------+---------------+---------------+ 
| Net cash flow from investing          |          |          (61) |         (290) | 
| activities                            |          |               |               | 
+---------------------------------------+----------+---------------+---------------+ 
|                                       |          | ------------- | ------------- | 
+---------------------------------------+----------+---------------+---------------+ 
| Financing activities                  |          |               |               | 
+---------------------------------------+----------+---------------+---------------+ 
| Capital element of interest bearing   |          |         (664) |         (525) | 
| loans and borrowings paid             |          |               |               | 
+---------------------------------------+----------+---------------+---------------+ 
| New loans                             |          |           129 |             - | 
+---------------------------------------+----------+---------------+---------------+ 
|                                       |          | ------------- | ------------- | 
+---------------------------------------+----------+---------------+---------------+ 
| Net cash flow from financing          |          |         (535) |         (525) | 
| activities                            |          |               |               | 
+---------------------------------------+----------+---------------+---------------+ 
|                                       |          | ------------- | ------------- | 
+---------------------------------------+----------+---------------+---------------+ 
| Net decrease in cash and cash         |          |         (150) |         (504) | 
| equivalents                           |          |               |               | 
+---------------------------------------+----------+---------------+---------------+ 
| Cash and cash equivalents at the      |          |           563 |         1,067 | 
| beginning of the year                 |          |               |               | 
+---------------------------------------+----------+---------------+---------------+ 
|                                       |          | ------------- | ------------- | 
+---------------------------------------+----------+---------------+---------------+ 
| Cash and cash equivalents at the end  |          |           413 |           563 | 
| of the year                           |          |               |               | 
+---------------------------------------+----------+---------------+---------------+ 
|                                       |          | ------------- | ------------- | 
+---------------------------------------+----------+---------------+---------------+ 
 
Significant non cash financing transactions include additions to fixed assets of 
GBP142,000 (2008: GBP259,000) relating to assets purchased on hire purchase 
arrangements. 
 
1.Accounting policies 
Basis of preparation 
The financial information has been prepared and approved by the Directors in 
accordance with IFRS as adopted by the European Union and IFRIC interpretations 
issued and effective at the time of preparing these statements. 
 
The Group has taken the business combination exemption, which allows that IFRS3 
not be applied to business combinations that took place prior to 1 December 
2006, the date of transition to IFRS.  Estimates under IFRS at the date of 
transition are consistent with the estimates made at the same time under UK 
GAAP.  The Group has also taken the share based payments exemption and, 
accordingly, IFRS2 has only been applied to awards granted after 7 November 
2002. 
 
The following Standards and Interpretations have been issued, but are not yet 
effective and have not been adopted early by the Group : 
+-------+------------------------------------+---------------+-------------+ 
|       |                                    |     Effective |     Date of | 
|       |                                    |        date - |          EU | 
|       | Title                              |     reporting | endorsement | 
|       |                                    |       periods |             | 
|       |                                    |   starting on |             | 
|       |                                    | or later than |             | 
+-------+------------------------------------+---------------+-------------+ 
| IFRS  | Business Combinations (Revised     |   1 July 2009 |           - | 
| 3     | 2008)                              |               |             | 
+-------+------------------------------------+---------------+-------------+ 
| IAS   | Consolidated and Separate          |   1 July 2009 |           - | 
| 27    | Financial Statements               |               |             | 
+-------+------------------------------------+---------------+-------------+ 
| IFRS  | Amendment to IFRS 2 Share Based    |     1 January |           - | 
| 2     | Payment : Vesting Conditions and   |          2009 |             | 
|       | Cancellations                      |               |             | 
+-------+------------------------------------+---------------+-------------+ 
| IAS 1 | Presentation of Financial          |     1 January |           - | 
|       | Statements                         |          2009 |             | 
+-------+------------------------------------+---------------+-------------+ 
| IAS   | Revision to IAS 23 Borrowing costs |     1 January |           - | 
| 23    |                                    |          2009 |             | 
+-------+------------------------------------+---------------+-------------+ 
| IAS   | Amendment to IAS 32 Financial      |     1 January |           - | 
| 32    | Instruments : Presentation and IAS |          2009 |             | 
|       | 1 Presentation of Financial        |               |             | 
|       | Statements - Puttable Financial    |               |             | 
|       | Instruments and Obligations        |               |             | 
|       | arising on Liquidation             |               |             | 
+-------+------------------------------------+---------------+-------------+ 
| IFRS  | Operating Segments                 |     1 January |          21 | 
| 8     |                                    |          2009 |    November | 
|       |                                    |               |        2007 | 
+-------+------------------------------------+---------------+-------------+ 
| IFRIC | Agreements for the Construction of |     1 January |           - | 
| 15    | Real Estate                        |          2009 |             | 
+-------+------------------------------------+---------------+-------------+ 
| IFRIC | Distributions of Non-cash Assets   |             1 |           - | 
| 17    | to Owners                          |     July 2009 |             | 
+-------+------------------------------------+---------------+-------------+ 
 
The Directors anticipate that the adoption of these standards and 
interpretations in future periods will have no material impact on the financial 
statements of the Group when the relevant standards come into effect for periods 
commencing on or after 1 December 2009. 
 
Basis of consolidation 
Subsidiaries are entities controlled by the Company.  Control exists when the 
Company has the power, directly or indirectly, to govern the financial and 
operating policies of an entity so as to obtain benefits from its activities. 
In assessing control, potential voting rights that presently are exercisable or 
convertible are taken into account.   The financial statements of subsidiaries 
are included in the consolidated financial statements from the date that control 
commences until the date that control ceases. 
 
The purchase method of accounting is used to account for the acquisition of 
subsidiaries by the Group. The cost of an acquisition is measured as the fair 
value of the assets given, equity instruments issued and liabilities incurred or 
assumed at the date of exchange, plus costs directly attributable to the 
acquisition. Identifiable assets acquired and liabilities and contingent 
liabilities assumed in a business combination are measured initially at their 
fair values at the acquisition date, irrespective of the extent of any minority 
interest. The excess of the cost of acquisition over the fair value of the 
Group's share of the identifiable net assets acquired is recorded as goodwill. 
If the cost of acquisition is less than the fair value of net assets of the 
subsidiary acquired, the difference is recognised directly in the income 
statement. 
 
All intra-group balances and transactions, including unrealised profits arising 
from intra-group transactions, are eliminated fully on consolidation. 
 
Significant accounting judgements, estimates and assumptions 
The key assumptions concerning the future, and other sources of estimation 
uncertainty at the balance sheet date, that have a significant risk of causing a 
material adjustment to the carrying amounts of assets and liabilities within the 
next financial year are discussed below: 
 
Impairment of goodwill - The Group determines whether goodwill is impaired at 
least on an annual basis. This requires an estimation of the "value in use" of 
the cash generating units to which the goodwill is allocated. Estimating a value 
in use amount requires management to make an estimate of the expected future 
cash flows from the cash generating unit and also to choose a suitable discount 
rate in order to calculate the present value of those cash flows. 
 
Deferred tax assets - Deferred tax assets are recognised for all unused tax 
losses to the extent that it is more likely than not that taxable profit will be 
available against which the losses can be utilised. Significant management 
judgement is required to determine the amount of deferred tax assets that can be 
recognised, based upon the likely timing and level of future taxable profits. 
 
Share based payments - The estimation of the fair value of share options and 
other equity instruments at their date of grant requires management to make 
estimates concerning the expected volatility of the underlying shares, the 
dividends payable on the shares and the time at which employees are likely to 
exercise vested options. 
 
Debtors - Debtors are recognised to the extent that they are judged recoverable. 
Management reviews are performed to estimate the level of reserves required for 
irrecoverable debt. Provisions are made specifically against invoices where 
recoverability is uncertain. 
 
Segmental reporting 
The Directors consider that the Group operates only one class of business, being 
the manufacture of dental appliances.  All turnover and operating losses 
originate in the UK, therefore geographical analysis has not been presented. 
 
Property, plant and equipment 
Property, plant and equipment are held at cost less accumulated depreciation and 
impairment charges.  The cost of property, plant and equipment is the purchase 
price, together with any directly attributable costs of acquisition. 
 
Depreciation is provided at the following annual rates in order to write off the 
cost less estimated residual value, which is based on up to date prices, of 
property, plant and equipment over their estimated useful lives as follows: 
+-----------------------------------------+---------------------------+ 
| Freehold land                           | -  Nil                    | 
+-----------------------------------------+---------------------------+ 
| Freehold buildings                      | -  50 years               | 
+-----------------------------------------+---------------------------+ 
| Leasehold properties and improvements   | -  shorter of remaining   | 
|                                         | life or 50 years          | 
+-----------------------------------------+---------------------------+ 
| Plant and equipment                     | -  4 to 10 years          | 
+-----------------------------------------+---------------------------+ 
| Computer equipment                      | -  4 years                | 
+-----------------------------------------+---------------------------+ 
| Motor vehicles                          | -  4 years                | 
+-----------------------------------------+---------------------------+ 
 
Intangible assets - Goodwill 
Goodwill represents the excess of the cost of an acquisition over the fair value 
of the net identifiable assets of the acquired subsidiary at the date of 
acquisition.  The cost of acquisition represents the fair value of all 
consideration given in return for the assets acquired.  Goodwill on acquisition 
of subsidiaries is included in intangible assets.  Goodwill is tested annually 
for impairment and carried at cost less accumulated impairment losses. 
 
Intangible assets - Licences 
Software licences are capitalised and amortised over their useful economic life 
of five years.  The cost of the licence is the purchase price plus any 
incidental costs of acquisition. 
 
Impairment 
The carrying amounts of the Group's non-financial assets are reviewed at each 
balance sheet date to determine whether there is any indication of impairment. 
If any such indication exists, the asset's recoverable amount is estimated. 
 
For goodwill, assets that have an indefinite useful life and intangible assets 
that are not yet available for use, the recoverable amount is estimated at each 
balance sheet date 
 
An impairment loss is recognised whenever the carrying amount of an asset or its 
cash generating unit exceeds its recoverable amount.  Impairment losses are 
recognised in the consolidated income statement. 
 
An impairment loss is recognised for the amount by which the carrying amount 
exceeds its recoverable amount.  The recoverable amount is the higher of the 
asset's fair value less costs to sell and the value in use.  For the purposes of 
assessing impairments, assets are grouped at the lowest levels for which there 
are identifiable cash flows. 
 
Impairment losses recognised in respect of cash-generating units are allocated 
first to reduce the carrying amount of any goodwill allocated to cash-generating 
units (group of units) and then, to reduce the carrying amount of the other 
assets of the unit (group of units) on a pro-rata basis. 
 
Trade and other receivables 
Trade receivables are recognised and carried at original invoice amount less 
allowance for any uncollectible amounts.  Where receivables are considered to be 
irrecoverable an impairment charge is included in the income statement. 
 
Classification of financial instruments issued by the Group 
Following the adoption of IAS32 'Financial instruments: presentation', financial 
instruments issued by the Group are treated as equity only to the extent that 
they meet the following two conditions: 
 
-       they include no contractual obligations upon the group to deliver cash 
or other financial assets or to exchange financial assets or financial 
liabilities with another party under conditions that are potentially 
unfavourable to the group; and 
 
-       where the instrument will or may be settled in the Company's own equity 
instruments, it is either a non-derivative that includes no obligation to 
deliver a variable number of the Company's own equity instruments or is a 
derivative that will be settled by the Company's exchanging a fixed amount of 
cash or other financial assets for a fixed number of its own equity instruments. 
 
To the extent that this definition is not met, the proceeds of issue are 
classified as a financial liability.  Where the instrument so classified takes 
the legal form of the Company's own shares, the amounts presented in these 
financial statements for called up share capital and share premium account 
exclude amounts in relation to those shares. 
 
Finance payments associated with financial liabilities are dealt with as part of 
finance expenses.  Finance payments associated with financial instruments that 
are classified in equity are treated as distributions and are recorded directly 
in equity. 
 
Financial assets 
The Group classifies its financial assets depending on the purpose for which the 
asset was acquired.  The Group has the following financial assets: 
 
Loans and receivables:  These assets are non-derivative financial assets with 
fixed and determinable payments that are not quoted in an active market.  They 
arise principally through the provision of services to customers (trade 
receivables).  They are carried at fair value on initial recognition less 
provision for impairment.  Cash and cash equivalents comprise cash in hand, 
deposits held at call with banks and bank overdrafts. 
 
Financial liabilities 
Financial liabilities are comprised of termed loan facilities and trade 
payables, which are recognised at amortised cost. 
Interest bearing borrowings are recognised initially at fair value less 
attributable transaction costs. Subsequent to initial recognition, 
interest-bearing borrowings are stated at amortised cost with any difference 
between cost and redemption value being recognised in profit or loss over the 
period of the borrowings on an effective interest basis. 
 
Cash and cash equivalents 
Cash and cash equivalents comprise cash balances. 
 
Revenue recognition 
Revenue is recognised to the extent that it is probable that the economic 
benefits will flow to the Group and the revenue can be reliably measured. 
Revenue is measured at the fair value of the consideration received, excluding 
discounts and rebates. 
 
Revenue relates to the sale of goods. This is recognised when the significant 
risks and rewards of ownership of the goods have passed to the buyer, usually on 
despatch of the goods. 
 
Leases 
Leases where the lessor retains substantially all of the risks and rewards of 
ownership are classified as operating leases.  Rentals payable under operating 
lease rentals are charged to the income statement on a straight line basis over 
the term of the lease. 
 
Leases where the Group acts as lessee and obtains substantially all of the risks 
and rewards of ownership are classified as finance leases or hire purchase 
agreements.  Assets held under finance leases or hire purchase agreements are 
capitalised and depreciated over their useful economic lives.  The capital 
element of the future obligations under finance leases and hire purchase 
contracts are included as liabilities in the balance sheet.  The interest 
elements of the rental obligations are charged to the income statement over the 
periods of the finance leases and hire purchase agreements and represent a 
constant proportion of the balance of capital outstanding. 
 
Inventories 
Inventories are stated at the lower of cost and net realisable value. Cost 
includes all costs incurred in bringing each product to its present location and 
condition. Raw materials are stated at purchase cost. Work in progress includes 
the cost of materials and labour plus attributable overheads based on a normal 
activity level. Net realisable value is based upon estimated selling price less 
any further costs expected to be incurred to completion and disposal. 
 
Non-recurring items 
Non-recurring items are material items in the Income Statement which derive from 
events or transactions which fall within the ordinary activities of the Group 
and which individually or, if of a similar type, in aggregate the Group has 
highlighted as needing to be disclosed by virtue of their size or incidence if 
the financial statements are to give a true and fair view.  Such items are 
non-recurring, as by their nature they do not occur on a frequent basis. 
 
Post retirement benefits 
The Group operates a defined contribution pension scheme.  The assets of the 
scheme are held separately from those of the Group in an independently 
administered fund.  The amount charged to the income statement represents the 
contributions payable to the scheme in respect of the accounting period.  In 
addition, the Group contributes to the private pension plans of certain 
employees. These arrangements are of the money purchase type. 
 
Share based payments and employee benefits 
The Group operates a number of equity settled share based payment schemes. The 
fair value of awards to employees that take the form of shares or rights to 
shares is recognised as an employee expense with a corresponding increase in 
equity. The fair value is measured at grant date and spread over the period 
during which the employees become unconditionally entitled to the options. The 
fair value of the options granted is measured using an option valuation model, 
taking into account the terms and conditions upon which the options were 
granted. The amount recognised as an expense is adjusted to reflect the actual 
number of share options that vest except where forfeiture is due only to share 
prices not achieving the threshold for vesting. 
 
Short term employee benefits are recognised when an employee has rendered 
service to the Group during an accounting period. The amount recognised is the 
undiscounted amount of short term employee benefits expected to be paid in 
exchange for that service. 
 
Foreign currencies 
Transactions in foreign currencies are recorded using the rate of exchange 
ruling at the date of the transaction. Monetary assets and liabilities 
denominated in foreign currencies are translated using the rate of exchange 
ruling at the balance sheet date and the gains and losses on translation are 
recognised in the income statement. 
 
Taxation 
Tax on the profit or loss for the year comprises current and deferred tax. 
Income tax is recognised in the income statement except to the extent that it 
relates to items recognised directly in equity, in which case it is recognised 
in equity. 
 
Current tax is the tax currently payable based on taxable profit for the year, 
using tax rates enacted or substantively enacted at the balance sheet date, and 
any adjustment to tax payable in previous years. 
 
Deferred income taxes are calculated using the liability method on temporary 
differences.  Deferred tax is generally provided on the difference between the 
carrying amounts of assets and liabilities and their tax bases. However, 
deferred tax is not provided on the initial recognition of goodwill, nor on the 
initial recognition of an asset or liability unless the related transaction is a 
business combination or affects tax or accounting profit. 
 
Deferred tax on temporary differences associated with shares in subsidiaries is 
not provided if reversal of these temporary differences can be controlled by the 
group and it is probable that reversal will not occur in the foreseeable future. 
 In addition, tax losses available to be carried forward as well as other income 
tax credits to the group are assessed for recognition as deferred tax assets. 
 
Deferred tax liabilities are provided in full, with no discounting.  Deferred 
tax assets are recognised to the extent that it is probable that the underlying 
deductible temporary differences will be able to be offset against future 
taxable income.  Current and deferred tax assets and liabilities are calculated 
at tax rates that are expected to apply to their respective period of 
realisation, provided they are enacted or substantively enacted at the balance 
sheet date. 
 
Changes in deferred tax assets or liabilities are recognised as a component of 
tax expense in the income statement, except where they relate to items that are 
charged or credited directly to equity in which case the related deferred tax is 
also charged or credited directly to equity. 
 
Provisions 
Provisions are recognised when the Group has a present obligation (legal or 
constructive) as a result of a past event, it is probable that an outflow of 
economic benefits will be required to settle the obligation and a reliable 
estimate can be made of the amount of the obligation. Where the group expects 
some or all of a provision to be reimbursed, the reimbursement is recognised as 
a separate asset but only when the reimbursement is virtually certain. The 
expense relating to any provision is presented in the income statement net of 
any expected reimbursement. If the effect of the time value of money is 
material, provisions are discounted using a current pre-tax rate that reflects, 
where appropriate, the risks specific to the liability.  Where discounting is 
used, the increase in the provision due to the passage of time is recognised as 
a finance cost. 
 
2.   Non-recurring administrative expenses 
+---------------------------------------+---------------+---------------+ 
|                                       |          2009 |          2008 | 
+---------------------------------------+---------------+---------------+ 
|                                       |        GBP000 |        GBP000 | 
+---------------------------------------+---------------+---------------+ 
| Aborted takeover costs                |             - |            80 | 
+---------------------------------------+---------------+---------------+ 
| Professional advisers fees in         |             - |            20 | 
| relation to the potential VAT         |               |               | 
| liability                             |               |               | 
+---------------------------------------+---------------+---------------+ 
| Professional advisers fees in         |            28 |            30 | 
| relation to staff issues              |               |               | 
+---------------------------------------+---------------+---------------+ 
| Re-organisation and redundancy costs  |            50 |            42 | 
+---------------------------------------+---------------+---------------+ 
| Termination costs of directors        |           424 |             - | 
+---------------------------------------+---------------+---------------+ 
| Additional professional advisers fees |            32 |             - | 
+---------------------------------------+---------------+---------------+ 
|                                       | ------------- | ------------- | 
+---------------------------------------+---------------+---------------+ 
| Non-recurring administrative expenses |           534 |           172 | 
+---------------------------------------+---------------+---------------+ 
|                                       | ------------- | ------------- | 
|                                       |               |               | 
|                                       |               |               | 
+---------------------------------------+---------------+---------------+ 
3.   Loss per ordinary share 
+--------------------------------------------+---------------+---------------+ 
|                                            |          2009 |          2008 | 
+--------------------------------------------+---------------+---------------+ 
|                                            |               |               | 
+--------------------------------------------+---------------+---------------+ 
| Retained loss for the year (GBP000)        |       (4,054) |         (249) | 
+--------------------------------------------+---------------+---------------+ 
| Weighted average number of shares (basic)  |    42,017,444 |    42,017,444 | 
+--------------------------------------------+---------------+---------------+ 
| Weighted average number of shares          |    48,341,162 |    44,746,255 | 
| (diluted)                                  |               |               | 
+--------------------------------------------+---------------+---------------+ 
| Basic loss per ordinary share (pence per   |       (9.65p) |       (0.59p) | 
| share)                                     |               |               | 
+--------------------------------------------+---------------+---------------+ 
| Diluted loss per ordinary share (pence per |       (9.65p) |       (0.59p) | 
| share)                                     |               |               | 
+--------------------------------------------+---------------+---------------+ 
|                                            | ------------- | ------------- | 
+--------------------------------------------+---------------+---------------+ 
Diluted earnings per share for each of the two years ended 30 November 2009 has 
been calculated using the weighted average number of shares in issue during the 
year as adjusted for the dilutive effect of shares held under unexercised share 
options.  The calculation of diluted earnings per share assumes that all 
performance criteria are achieved in full and all options exercised. 
The potential increase in ordinary shares from the exercise of any of the share 
options at 30 November 2009 would be anti-dilutive as the Company reported a net 
loss for the year ended on that date.  These potential ordinary shares were 
therefore excluded from the calculation at that date and the diluted loss per 
share figure reported is the same as the basic earnings per share. 
 
4. Board of Directors 
Grahame Sewell, Non- Executive Chairman 
Aged 59 
Joined the Company upon flotation in 2002 and chairs both the Audit and 
Remuneration Committees. Grahame is regarded as an independent Director and was 
appointed Chairman in September 2009. 
 
Executive Directors 
 
Nigel Spring, Chief Executive Officer 
Aged 47 
Nigel was promoted to Chief Executive Officer in September 2009. He joined 1st 
Dental in March 2008 with over fifteen years' senior management experience. 
 
Jonathan Foxcroft, Finance Director 
Aged 46 
Jonathan joined 1st Dental in April 2009 with over 19 years senior finance 
experience in precision and volume manufacturing environments gained after he 
qualified as a Chartered Accountant. 
 
The terms of reference of the Audit and Remuneration committees are available 
upon request from the Company Secretary. 
 
Details of Senior Managers 
 
Elisabeth Wagster, Group Sales & Marketing Manager 
Aged 47 
Elisabeth joined the Company in March 2009 following a number of successful 
years within similar development roles elsewhere in the dental industry. 
 
Stefan Roguszka, Joint Group Technical Manager 
Aged 53 
Stefan has over 36 years technical experience, becoming Ripley laboratory 
manager in 2007. 
 
Gary Jenkinson, Joint Group Technical Manager 
Aged 40 
Gary rejoined 1st Dental in 2006 as Sheffield laboratory manager with over 23 
years technical experience initially starting at our Scarborough laboratory. 
 
Sel Baxter, Field Operations Manager 
Aged 59 
After a number of successful years managing his own laboratory, Sel joined the 
group when it acquired his laboratory and was promoted to Field Operations 
Manager in 2007. 
 
Fliss Stewart, Group HR Manager 
Aged 26 
Fliss joined 1st Dental in March 2007 and established the HR function in March 
2008. She is currently studying for the PDS post graduate qualification in Human 
Resource Management with the CIPD. 
 
 
 
 
 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
 FR UURWRRSAOUAR